Argentina Politics Update - 18 October 2023
Argentina votes on Sunday, currency swap with China extended, US-Argentina lithium relationship faces hurdles
Hello and welcome to the Road to the Casa Rosada! If you find this newsletter useful, please consider sharing it with your colleagues and network.
Argentina heads to the polls this Sunday to elect the country’s next president. If no candidate wins 45 percent of the vote - or 40 percent with a 10 point margin over the following candidate - there will be a runoff election. Only the two most voted candidates will proceed to the second round, which is set to take place on November 19. Be sure to check in on Monday for an analysis of the first-round results.
Politics
Sergio Massa: can Argentine political wheeler-dealer save Peronism? (Reuters)
That Economy Minister and presidential candidate Sergio Massa “is the least Peronist of the Peronists” is an important selling point for the ruling Unión por la Patria (UxP) coalition candidate, as he appeals to more moderate voters
Massa has created a new political structure within the Peronist bloc, which has been headed by current vice president Cristina Fernández de Kirchner for years
Argentina’s football leaders offer explicit support to Sergio Massa (Buenos Aires Times)
Massa has been deepening ties with the leaders of soccer teams (clubs in Argentina are not run as private companies, rather as public entities)
Last week, Massa was present for the reestablishment of Decree 1212, which “allows tax deductions for activities performed by clubs (particularly those that provide educational services and promote [soccer] in impoverished areas)”
Down, but not out: Two Argentine political veterans seek to thwart upstart firebrand (AP)
AP profiles both Economy Minister Sergio Massa and former Defense Minister Patricia Bullrich ahead of Sunday’s elections
Milei’s vision seduces young Argentine voters (Buenos Aires Times)
Part of libertarian candidate Javier Milei’s online campaign strategy is called “horizontal communication,” meaning he endorses various social media accounts that disseminate his message, rather than tweet everything himself
Only 27.5% of Milei supporters describe themselves as being in a “poor” or “very poor” economic situation; 24.6% are “good,” and another 45.8% are “normal”
He Called the Pope a ‘Filthy Leftist.’ Now He Wants to Be President. (New York Times)
Milei’s incendiary remarks against Pope Francis is a risky move in Argentina, where almost two out of three people identify as Catholic
Milei’s political opponents, and even some of his own team, have called for him to apologize for his various comments against the Pope
Jorge Macri: ‘If Patricia Bullrich makes the run-off, she’s president’ (Buenos Aires Times)
Jorge Macri, Juntos por el Cambio (JxC) opposition candidate for mayor of Buenos Aires City, is convinced that Bullrich can be the country’s next president
Bullrich announces Larreta will be her Chief of Staff if she wins the election (Buenos Aires Herald)
Bullrich would name Horacio Rodriguez Larreta, Buenos Aires City mayor and former JxC internal rival for the presidency, if elected
How Buenos Aires’ Industrial Ring Defines Argentine Politics (Americas Quarterly)
Buenos Aires’ conurbano, made up of 24 municipalities surrounding Buenos Aires City, is “an electoral juggernaut that can make or break an election,” writes Jordana Timerman. “It is the cradle of Peronism and the key to the movement’s decades of political dominance.”
Illegal fishing around Malvinas Islands could 'trigger serious diplomatic conflict' (Buenos Aires Times)
The Latin American Foundation for Fisheries Sustainability (FULASP) prepared a formal complaint against the United Kingdom, asking that “the British government immediately stop the indiscriminate granting of fishing permits in the exclusion zone.”
FULASP alleges that illegal fishing is undermining Argentina’s conservation efforts and almost half of what is being caught by Argentina is being extracted illegally by vessels
Economics
President confirms Argentina has extended currency swap with China to bolster reserves (Buenos Aires Times)
Beijing extended its currency swap with Argentina by another $6.5 billion
Argentina had requested $5 billion, and China offered an additional $1.5 billion
Argentina’s current Central Bank reserves are at $24.99 billion as of Tuesday, but net reserves are estimated to be about $5 billion in the negative
Debt, inflation and the peso: Argentina's election worries (Buenos Aires Times)
Argentina will need a “dramatic spending adjustment” to revert some of its economic woes, regardless of who the next president will be
Milei proposes dollarization, Bullrich wants to “shrink the state and free the foreign exchange market,” and Massa wants to “boost exports and development with social inclusion”
Baffling Argentina FX rates on borrowed time as election nears (Buenos Aires Times)
Both Milei and Bullrich have promised to do away with the multiple - and confusing - exchange rates currently in place
Further depreciation of the peso is expected, especially in the event of a Milei presidential win and/or an announcement of dollarization
A sharp decline in the peso’s value following the Sunday’s elections is also likely
IMF warns Argentina not to dawdle on incremental economic reform (Buenos Aires Times)
Rodrigo Valdés, the Western Hemisphere Director for the IMF, said that Argentina’s “situation demands much faster actions,” and warned against gradual economic adjustments
It’s Time to Dump the Peso and Dollarize Argentina (National Review)
Steve Hanke and Emilio Ocampo argue that Argentina is already “the most heavily dollarized country outside of the U.S.,” with locals stashing over $200 billion either in banks or in their homes amidst a near-total understanding of the peso’s diminishing value
Argentina’s Milei and the Dollar (Wall Street Journal)
Though some of Milei’s tactics and statements may be merely part of his campaign strategy, he still lacks the ability to create political alliances to push forward his proposed legislative agenda, including his plans for dollarization
Lithium + Energy
The U.S. Needs Argentina’s Lithium. The IRA’s Getting in the Way (World Politics Review)
The United States’ Inflation Reduction Act (IRA) includes a caveat that a tax credit is only available for consumers buying locally or from countries that have a free trade agreement (FTA) with the US
Chile, Mexico, and Peru have a FTA with the US; Argentina and Brazil do not
Benjamin Gedan and Andrew Sady-Kennedy argue that the US and Argentina should seek a sector-specific agreement as a way to meet the requirements of the IRA without necessitating a FTA between the two countries
‘Vaca Muerta was the future’: Argentina goes all in on fracking (Guardian)
Environmentalists worry that Argentina’s focus on fracking is diverting attention and resources away from renewable energy and combating the climate crisis
The increase of fracking practices in Vaca Muerta, a geological formation which holds one of the largest deposits of fossil gas in the world, has impacted the agriculture and livelihood of those living in the area
Critics also argue that the benefits bring brought in by Vaca Muerta have not reached the locals, with over 37% of the population of the Neuquén province living in poverty
Hxagon provides risk analysis and bespoke investigations in emerging and frontier markets, primarily in Latin America. If you are interested in our work or acquiring our services, do not hesitate to contact us!
Contact: info@hxagon.com
~~~
If you have any feedback or comments regarding the newsletter, or would just like to connect, feel free to reach out!